The Department had also observed that the said Fund Managers and Key Traders were sharing specific trading information with brokers/middlemen and persons in authority in certain foreign jurisdictions. “These individuals in turn have used such information for illegal gains in the stock market either by trading in their own accounts or in the accounts of their clients,” the department said in a statement without naming Joshi. However, sources confirmed that the fund manager in question is Joshi.
The department also said that Joshi’s family members have admitted in their statements that the unaccounted cash generated from the operations was remitted to their bank accounts mainly through shell entities based in Kolkata. “From these bank accounts, funds have been transferred to the bank accounts of companies/entities incorporated in India and other low tax jurisdictions. The nexus between the fund managers, middlemen, stock brokers and entry operators has been exposed before the seizure of evidence.
On July 28, the Mumbai investigation wing of the IIT department, which conducted searches at more than 25 campuses, was spread across Mumbai, Ahmedabad, Vadodara, Bhuj and Kolkata.
“Evidence of large scale unaccounted investments in cash loans, fixed deposits, immovable properties and their renovation etc. have also been found and seized. More than 20 lockers have been banned. Unaccounted deposits of more than one lakh rupees so far. 55 crores have been seized,” the department added.
Joshi was not immediately available for comment.
Joshi, who was sacked by the asset management company amid allegations of wrongdoing, including front-running and receiving kickbacks from brokerages, is also being investigated by the Securities and Exchange Board of India for violations of securities law.
A person aware of the development said the tax authorities had sought details from SEBI after the market regulator conducted searches at 16 entities, including the offices of Axis Mutual Fund, stock brokers and a few other persons.
Joshi was sacked by the property management company in May citing alleged violation of ethics and code of conduct.
Front-running, in which he is alleged to be involved, is trading a stock or any other financial asset by a broker who has knowledge of a future transaction that is going to substantially affect its price.
Investigators have found that Joshi owns at least six residential properties in Mumbai – two flats in the plush locality of Lower Parel and four in suburban Ghatkopar, the people said.
“It is much more than a front-running case. For the last 18 months, Joshi was carrying out illegal activities through several organizations. The entire work-from-home situation was misused by them,” said another person familiar with the development.
“Sebi’s investigation is still on, it is recording the statements of the entities involved. Once the investigation is complete, all the information collected will be officially communicated to all the agencies concerned,” the official said.
A letter received by the top management of Axis Mutual, raising questions about Joshi’s lifestyle, was the trigger for the investigation. His lifestyle came under scrutiny as it was speculated that he drove a premium sports car.
People said that the car is not owned by him but belongs to someone else. Investigators came to know about this when they went to search his premises.
Joshi’s employment with Axis Mutual was terminated following an investigation by a forensic auditor appointed by the asset manager. Investigations were conducted to find out whether its executives were involved in front-running, receiving kickbacks and carrying out trades that were detrimental to the plans.
In June, Joshi had sued the fund house, seeking Rs 54 crore in damages for alleged wrongful termination and non-compliance of due process of law.